Baseball's Finances? Just Fine, Despite the
Strike
Testifying before the U.S. Senate in February 1995, Acting
Commissioner for Life Bud Selig warned, "I think there are a
significant number of clubs that probably could not make it
through the season" without major concessions from the
players. The players made no concessions and the strike cost the
owners millions, but we're still waiting for that first
bankruptcy. Since MLB teams don't open their books to outside
observers, how can an outsider assess baseball's true
financial condition?
One way is to look at the cost of franchises. No franchise has
been sold at a loss since George Steinbrenner bought the Yankees
from CBS more than two decades ago. In 1991, Denver and Miami
interests paid $95 million for expansion franchises. Four years
later, in the middle of the strike, MLB charged $130
million for the next two expansion teams, Phoenix and Tampa. Sure
doesn't look like a dying industry to me...
The folks at Financial World have another method, based on
estimates of team revenues and expenses. Their conclusion?
Despite the strike, the average Major League Baseball team turned
a $2.1 million profit last year. The Red Sox did far better.
Here's how the numbers break down:
Gate receipts. Last year Sox fans paid $27.1 million to
enter Fenway -- sixth highest total in the majors, behind
Colorado, Baltimore, Toronto, Cleveland and Atlanta. Colorado and
Baltimore both took in more than $35 million; at the other end of
the spectrum, the Pirates and Padres received less than $10
million.
Media revenues. With $24.2 million from TV and radio, the
Red Sox were the majors' fourth highest grossers, slightly
behind the Dodgers. The two New York teams far outstripped the
field: the pitiful Mets earned $33.6 million, while the
Yankees' $42 million/year cable contract contributed to a
$54.3 million gross. (The Braves and Cubs, whose owners also
operate superstations, receive artificially low rights fees.)
Meanwhile, the Brewers took in less than $10 million, with the
Royals, Padres and Mariners only slightly better off.
Stadium revenues (luxury boxes, parking, concessions). The
Sox' $14.7 million ranked sixth, behind the Rangers, Orioles,
Dodgers, Rockies and White Sox: four teams with new stadia and a
fifth which owns its park outright. The Pirates, Twins and Expos
received less than $3.5 million each from these sources.
Overall revenues. In 1995 the Sox' $67.9 million from
baseball operations ranked fifth in the majors -- but only third
in the AL East -- behind the Yankees, Orioles, Dodgers, and
Rockies. By contrast, the Pirates received less than $25 million;
the Brewers, Expos and Padres, under $30 million.
Player expenses. The Red Sox' $32.1 million ranked
15th out of 28 teams. The Yankees, Orioles and Blue Jays spent at
least $11 million more to finish behind the Sox. The Expos spent
$20 million less than the Red Sox; the Brewers and Pirates, about
half as much.
Non-player expenses. Although every team needs the same
basic front-office staff, some spend twice as much as others to
meet these needs. Most big-market teams (but, surprisingly, not
the Yankees) spend more than $20 million/year on administrative
expenses -- often in the form of salaries and bonuses paid to the
owner and his relatives. The small-market Twins, Padres, Pirates
and Expos operate on $10 million or less.
The bottom line: Last year only the Yankees and Mets earned more
than the AL East champion BoSox. The '96 edition may not be
as successful on or off the field, but the Red Sox remain one of
baseball's blue-chip investments.
Most and Least Profitable Teams in 1995
IN THE BLACK
Yankees ($24.0 million): Huge cable deal covers a lot of
high-priced flops
Mets ($20.8 million): Would have earned $6 million if they'd
charged no admission
Red Sox ($15.4 million): Popular team, big market, moderate
payroll = big bucks
Dodgers ($12.8 million): Still baseball's model franchise
Rockies ($11.5 million): New stadium and huge fan base
Rangers ($7.6 million): High overhead covered by millions from
luxury boxes
Expos ($7.1 million): Not a misprint -- exceptionally well
managed franchise built around good, cheap young talent
IN THE RED
Reds ($11.8 million loss): Marge manages as well as she
understands German history
Mariners ($9.8 million loss): Gambled on high-priced players and
won a new stadium from Washington taxpayers
White Sox ($8.0 million loss): Owner Reinsdorf provoked the
strike -- couldn't happen to a nicer guy
Royals ($6.4 million loss): Ewing Kaufman subsidized the team for
years; his estate won't
Tigers ($5.3 million loss): A team which pays Cecil Fielder over
$9 million/year deserves to lose a fortune
Padres ($5.1 million loss): Fans still angry at former
management's dumping of stars
Athletics ($4.9 million loss): Still unclear whether Bay Area can
support two teams.
Copyright © 1996 Doug Pappas. All rights
reserved.
Originally published in the July 1996 issue of Boston
Baseball.
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